GEORGIA AND OFFSHORES: FROM “TAX HEAVEN” TO “CORRUPTED HEAVEN”

Abstract

In the modern world, doing business using offshore companies is a legal and permissible form of business. At the same time, the lack of transparency of doing business offshore, the wide opportunities for money laundering and corruption, instills a well-founded negative attitude towards them in the public, as they carry high risks of shadowing and corruption. Offshore investments facilitate international trade and attract foreign capital to the country, however, in addition to the benefits of offshore investments, we must also focus on the risks that characterize them. In particular, the main threats are the high risks of "systemic political corruption" and the possibility of active participation of offshore capital in political processes. Offshore investments account for a significant share of foreign direct investment in Georgia. As an analysis of existing official statistics shows, in 2011-2020, only 16 offshore centers received more than $ 2.7 billion in foreign direct investment and more than $ 0.5 billion has went out. Luxembourg leads in foreign direct investment from offshore centers (770 999.7 thousand USD).

The work discusses the place and role of offshore companies in the Georgian economy. Pros and Cons of Offshore Investments. Recommendations for offshore capital regulation in Georgia are presented.